Growth for twelfth consecutive quarter, says CPA survey

Published: 10 May, 2016

Construction activity increased across the supply chain for a twelfth consecutive quarter during Q1 2016, according to the latest Construction Trade Survey from the Construction Products Association (CPA), but uncertainty prevails for the sector going forward.

The CPA report covers construction product manufacturers representing the beginning of the supply chain, through to main contractors, specialist contractors, SME builders and civil engineers carrying out work on the ground.

Rebecca Larkin, Senior Economist at the CPA, commented: “After a slowdown at the end of last year, firms throughout the construction industry experienced a stronger opening quarter in 2016. In spite of this, the clear theme for Q2 is uncertainty, with main contractors reporting lower orders in all sectors as projects are paused or postponed ahead of the EU referendum in June.

"Beyond that, firms continued to indicate that a shortage of skilled workers is the largest threat to construction activity over the rest of the year. Main contractors reported difficulties in recruiting bricklayers, carpenters and plasterers in Q1, while low availability of labour was also reflected in upward pressure on wage bills among product manufacturers and civil engineers.”

Richard Beresford, chief executive of the National Federation of Builders, said: "Uncertainty over the outcome of the EU referendum and over the nation's defining issue – housing – is reflected in slowing industry performance. While homes will continue to be built, as long as there is uncertainty over government policy, we will not be able to provide anywhere near the number of homes people need."

Key survey findings include:

19% of main building contractors, on balance, reported that construction output rose in the first quarter of 2016 compared with a year ago

A balance of 38% of specialist contractors reported a rise in output during Q1

Some 13% of SME contractors reported increased workloads in Q1 compared to three months earlier

A balance of 13% of main contractors reported a decrease in orders in private housing and 42% reported a decrease in public new housing orders

A quarter of SMEs and 21% of specialist contractors reported an increase in enquiries in Q1

Some 13% of civil engineering firms reported an increase in new orders in Q1, on balance

Half of main contractors reported difficulties recruiting carpenters, 40% for bricklayers and 36% for plasterers, during Q1

Overall costs increased for 74% of civil engineers contractors, while 42% of main contractors reported labour costs rose in Q1 compared with the previous quarter

All heavyside product manufacturers questionned reported that wages and salaries increased from a year earlier.

ONS figures published show that construction output in July fell by 0.9% and was 0.4% lower compared with one year earlier. In addition, new orders in Q2 declined 7.8% and fell 12.6% on an annual basis.